Correlation Between East West and San Miguel
Can any of the company-specific risk be diversified away by investing in both East West and San Miguel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining East West and San Miguel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East West Banking and San Miguel Corp, you can compare the effects of market volatilities on East West and San Miguel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in East West with a short position of San Miguel. Check out your portfolio center. Please also check ongoing floating volatility patterns of East West and San Miguel.
Diversification Opportunities for East West and San Miguel
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between East and San is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding East West Banking and San Miguel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on San Miguel Corp and East West is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on East West Banking are associated (or correlated) with San Miguel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of San Miguel Corp has no effect on the direction of East West i.e., East West and San Miguel go up and down completely randomly.
Pair Corralation between East West and San Miguel
Assuming the 90 days trading horizon East West is expected to generate 1.93 times less return on investment than San Miguel. In addition to that, East West is 2.7 times more volatile than San Miguel Corp. It trades about 0.03 of its total potential returns per unit of risk. San Miguel Corp is currently generating about 0.18 per unit of volatility. If you would invest 8,705 in San Miguel Corp on September 14, 2024 and sell it today you would earn a total of 95.00 from holding San Miguel Corp or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
East West Banking vs. San Miguel Corp
Performance |
| Timeline |
| East West Banking |
| San Miguel Corp |
East West and San Miguel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East West and San Miguel
The main advantage of trading using opposite East West and San Miguel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East West position performs unexpectedly, San Miguel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in San Miguel will offset losses from the drop in San Miguel's long position.| East West vs. Allhome Corp | East West vs. Atlas Consolidated Mining | East West vs. Robinsons Retail Holdings | East West vs. Converge Information Communications |
| San Miguel vs. National Reinsurance | San Miguel vs. Jollibee Foods Corp | San Miguel vs. Concepcion Industrial Corp | San Miguel vs. Asia United Bank |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.
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